(CercleFinance.com) – The markets are reacting negatively to US employment figures deemed to be very robust (+528,000) and the Paris Stock Exchange is accelerating its decline towards 6,455, i.e. -0.9%, which reduces the weekly gain to one symbolic gain of +0.1%.
The Euro-Stoxx50 fell -1% (3,720), bringing the rise to +0.6% over the past week. On Wall Street, the Dow Jones is expected to fall -0.8%, the S&P500 -1.2%, and the Nasdaq should lose more than 1.5%.
The Dollar jumped +0.9% against the Euro towards $1.014 and +1.1% against the Pound (the United Kingdom will be in recession for four quarters according to the BoE, which forecasts a negative GDP of -1.5% in 2023).
The monthly U.S. jobs report says the U.S. economy generated 528,000 nonfarm payrolls in July (372,000 in June), according to the Labor Department, a number well above the consensus of +250,000, and the unemployment rate fell by 0.1 point to 3.5%, thus returning to its pre-Covid level, at the beginning of February 2020.
The labor force participation rate stood at 62.1%, a level which nevertheless remains 1.3 points lower than in February 2020, and the average hourly income increased to a annual rate of 5.2%.
In addition, job creations for the two previous months were revised, going from 384,000 to 386,000 for May and from 372,000 to 398,000 for June, ie a total revision balance of +28,000 for these two months.
The labor market therefore remains one of the last major drivers of the American economy to hold firm, with job creations still solid and an unemployment rate that remains at a very low level, reflecting a situation of full employment. .
The prospect of a multiplication of rate hikes by the Federal Reserve is growing and the bond markets are reacting negatively: the T-Bonds are tightening by +12.5Pts towards 2.80%, which wipes out the gains of the week.
According to CME Group’s FedWatch Barometer, the market estimates a 65% chance of a 50 basis point Fed hike next month and a 40% chance of a quarter point hike .
In Europe, our OATs and Bunds recovered by +6pts to 1.415 and 0.864% respectively, BTPs posted only +2pts to 2.85% (‘spread’ reduced to just +200pts against the Bund).
Investors were able to learn this morning of an increase in production in June 2022 in the manufacturing industry in France (+1.2% after +1%) as in industry as a whole (+1 .4% after +0.2%), according to data adjusted for seasonal variations and working days (CVS-CJO).
INSEE, which publishes these figures, specifies that production is increasing again in capital goods (+3.5%) and transport equipment (+2.8%), and rebounding in extractive industries, energy , water (+2.4%) as well as in the food industry (+2.2%).
Production in the second quarter of 2022 is higher than that of the same quarter of 2021 in the manufacturing industry (+2%). For industry as a whole, the increase was significantly more moderate (+0.2%) due to the drop in energy production.
France’s current balance of payments deteriorated sharply in the second quarter, mainly due to higher energy bills, data released by the Banque de France showed.
The current account deficit stood at 8.6 billion euros in CVS-CJO data for the quarter, a deterioration of 7.5 billion compared to a first quarter that was already in deficit (-1.1 billion).
In addition, France’s trade balance showed a deficit of nearly 13.1 billion euros for June, compared to a deficit of 12.9 billion the previous month, according to CVS-data. CJO of the Customs Administration.
As the earnings season draws to a close, a few European heavyweights are also due to unveil their quarterly accounts today, including German insurance giant Allianz.
In securities news, Rothschild & Co publishes for the first six months of the year, net income group share down 28% to 249 million euros, i.e. EPS of 3.43 euros, despite revenues up 2% to nearly 1.38 billion euros.
Maurel & Prom publishes for the first half of 2022 a net profit of 138 million dollars, more than quadrupling in annual comparison (32 million a year earlier), and a gross operating surplus of 250 million, up 113%.
Finally, Sanofi announces the establishment of a collaboration with the Innovent Biologics laboratory, which has a large footprint in China, aimed at making innovative drugs available to patients suffering from difficult-to-treat cancers in this country.